Arazasa Equipment Inc

Multiple Choice

Arazasa Equipment Inc. (AEI) is planning to setup a small business importing and supplying medical equipment to the doctor's offices in British Columbia. The bank has setup a line of credit allowing AEI to import the equipment. The company received an initial advance of $100 000 on its revolving demand loan on April 1, 2016. On the 27th of each month, interest is calculated up to but not including 27th of the month. It is then deducted from AEI's deposit account. Because of the lack of credit history, the bank charged an interest rate of 9.75% but dropped it to 9.5% on April 17. On May 1, another $100 000 was drawn on the line of credit. How much interest did AEI pay by May 25?

A) $427.40
B) $364.38
C) $1353.42
D) $2145.21